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FCA commences High Court proceedings over unauthorised CIS

Chris Hamblin, Editor, London, 12 November 2020

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The UK's Financial Conduct Authority has embarked on proceedings in the High Court against Mr Robin Forster, Fortem Global Limited and Mr Richard Tasker over their alleged links to investments in care homes in which investors appear to have lost at least £30 million.

The proceedings – which allege that the defendants carried out unauthorised activity in relation to the operation and/or promotion of collective investment schemes - will seek injunctions and restitution for those investors.

Mr Forster has given undertakings to the court which have the effect of freezing his assets worldwide, pending judgment. The undertakings also prohibit the promotion of the scheme and prevent any further sales of investments in the scheme. The unauthorised schemes were established and operated by two of his companies which are now in administration - Qualia Care Developments Limited (QCD) and Qualia Care Properties Limited (QCP). Fortem Global Ltd was the main promoter of the schemes. None of the promotional material was approved by an authorised person.

Before they fell into administration, QCD and QCP between them owned 13 care homes in the North East of England. They sold, or claimed to sell, investments in rooms in these homes and rooms in a further three homes which neither of them owned. A total of approximately £50 million has been invested in these homes since 2016.

The firms sent out some misleading statements - and created some misleading impressions - about the financial sustainability of the schemes to the investors. They set an unrealistic level of return of between 8% and 10% a year.

The FCA alleges that there was never any real prospect that the operation of the care homes could generate profits that could produce those returns. Payments of this kind were only ever likely to be possible by taking money from later investors to pay the earlier investors - unsustainable characteristics which are present in pyramid or Ponzi schemes.

Shortly before placing QCD and QCP into administration, Mr Forster moved £1.8 million (substantially all of their funds) into a newly established bank account in the name of Qualia Care Holdings Ltd.

The FCA also alleges that Mr Forster was knowingly concerned in the activities of QCD, QCP and Fortem Global and that Mr Tasker, the sole director of Fortem Global, is knowingly concerned in the activities of Fortem Global.

The FCA is seeking an injunction and a declaration from the High Court that the defendants’ actions amounted to unauthorised activity and will seek a restitution order to return funds to consumers who were affected by these alleged breaches.

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